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Bach: Xbox To Turn Profit In 2008

Following Microsoft's recent Q3 report that showed its Xbox division posting a $315 million loss and sales slipping 21 percent to $929 million, division president Robbie Bach has sa
Following Microsoft's recent Q3 report that showed its Xbox division posting a $315 million loss and sales slipping 21 percent to $929 million, division president Robbie Bach has said that 2008 will be the first year for Xbox to turn a profit. Asked when Xbox might contribute its first billion dollars to Microsoft's company line in a new interview with online tech news source eWeek, Bach responded that "the pieces are in place." "Specific date—oh, that's going to depend on what happens in pricing," said Bach, "which partly we control, partly we don't. You know what happens in component costs—mostly we have pretty good influence over that, but there are places where we don't. Pricing on memory goes up and down seemingly like a yo-yo, so [we have to manage] through that." However, Bach predicted, "it's a business that will be profitable next year—we'll make money next year and that will be the first time, which is pretty exciting. And then the next two or three years are the place where you need to make tracks, and the next two or three years are where you have to make money." Microsoft's third quarter results showed an overall $4.93 billion in profits and $14.40 billion in sales, but its Xbox-encompassing Entertainment and Devices division posting a $315 million loss, up 22 percent from last year's $402 million, and sales slipping 21 percent to $929 million, down 21 percent over last year's $1.18 billion. Microsoft says the drop in sales came primarily because of decreases in the sale of Xbox 360s. During the quarter, the company shipped a half million consoles, as compared to 1.7 in the third quarter of 2006, that being the first full quarter in which Xbox 360s became available. Quarterly losses were blamed on expenses related to the launch of Microsoft's Zune media player, as well as expenses from a lengthening of the Xbox 360's warranty period.

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